Theoretical notes on bubbles and the current crisis

We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and policy implications. In particular, we show how the model can account for: (i) a gradual and protracted expansionary phase followed by a sudden and sharp recession; (ii) the connection (or lack of connection!) between financial and real economic activity and; (iii) a fast and strong transmission of shocks across countries. We also use the model to explore the role of fiscal policy.bubbles, dynamic inefficiency, financial accelerator, credit constraints, financial crisis, pyramid schemes.

Theoretical notes on bubbles and the current crisis

We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and policy implications. In particular, we show how the model can account for: (i) a gradual and protracted expansionary phase followed by a sudden and sharp recession; (ii) the connection (or lack of connection!) between financial and real economic activity and; (iii) a fast and strong transmission of shocks across countries. We also use the model to explore the role of fiscal policy. JEL Classification: E32, E44, G01, O40bubbles, credit constraints, financial accelerator, financial crisis, pyramid schemes

Enforcement problems and secondary markets

There is a large and growing literature that studies the effects of weak enforcement institutions on economic performance. This literature has focused almost exclusively on primary markets, in which assets are issued and traded to improve the allocation of investment and consumption. The general conclusion is that weak enforcement institutions impair the workings of these markets, giving rise to various inefficiencies. But weak enforcement institutions also create incentives to develop secondary markets, in which the assets issued in primary markets are retraded. This paper shows that trading in secondary markets counteracts the effects of weak enforcement institutions and, in the absence of further frictions, restores efficiency.Enforcement, default, secondary markets, sovereign risk, weak law enforcement

Sovereign Risk and Secondary Markets

Conventional wisdom says that, in the absence of sufficient default penalties, sovereign risk constrains credit and lowers welfare. We show that this conventional wisdom rests on one implicit assumption: that assets cannot be retraded in secondary markets. Once this assumption is relaxed, there is always an equilibrium in which sovereign risk is stripped of its conventional effects. In such an equilibrium, foreigners hold domestic debts and resell them to domestic residents before enforcement. In the presence of (even arbitrarily small) default penalties, this equilibrium is shown to be unique. As a result, sovereign risk neither constrains welfare nor lowers credit. At most, it creates some additional trade in secondary markets. The results presented here suggest a change in perspective regarding the origins of sovereign risk and its remedies. To argue that sovereign risk constrains credit, one must show both the insufficiency of default penalties and the imperfect workings of secondary markets. To relax credit constraints created by sovereign risk, one can either increase default penalties or improve the workings of secondary markets.

Understanding bubbly episodes

bubbles, dynamic inefficiency, economic growth, financial frictions, pyramid schemes

Sovereign risk and secondary markets

Conventional wisdom views the problem of sovereign risk as one of insufficient penalties. Foreign creditors can only be repaid if the government enforces foreign debts. And this will only happen if foreign creditors can effectively use the threat of imposing penalties to the country. Guided by this assessment of the problem, policy prescriptions to reduce sovereign risk have focused on providing incentives for governments to enforce foreign debts. For instance, countries might want to favor increased trade ties and other forms of foreign dependence that make them vulnerable to foreign retaliation thereby increasing the costs of default penalties.Sovereign risk, secondary markets, default penalties, commitment, international risk sharing, international borrowing

Enforcement Problems and Secondary Markets

There is a large and growing literature that studies the effects of weak enforcement institutions on economic performance. This literature has focused almost exclusively on primary markets, in which assets are issued and traded to improve the allocation of investment and consumption. The general conclusion is that weak enforcement institutions impair the workings of these markets, giving rise to various inefficiencies. But weak enforcement institutions also create incentives to develop secondary markets, in which the assets issued in primary markets are retraded. This paper shows that trading in secondary markets counteracts the effects of weak enforcement institutions and, in the absence of further frictions, restores efficiency.

Determining the Interest for a Drone Certification Course

The purpose of this study is to explore the interest of the Construction Management students at California Polytechnic State University, San Luis Obispo with drone usage and acquiring a drone license. This research paper analyzes students\u27 prior skill sets that were gained from a past internship or class and if that exposure to drones is sufficient enough to apply those skills to the construction industry. Implementing a drone certification course will benefit both the students and companies in the construction industry. Within the construction industry there is a rise in popularity with using technology devices to track and collect data, implementing a course or elective that help students gain their drone license within the Construction Management Department will better prepare students to apply drone usage to the construction field. A course of this sort will help students create a stronger resume and it may lead to new career opportunities. This paper explores students’ interest on the topic and why obtaining a drone license would be beneficial. That was done by conducting a survey that consisted of 12 questions, this survey was shared with Construction Management students at California Polytechnic State University, San Luis Obispo. Based on the study that was conducted the majority of students would be interested in taking a drone certification course

Fission induced by nucleons at intermediate energies

Monte Carlo calculations of fission of actinides and pre-actinides induced by protons and neutrons in the energy range from 100 MeV to 1 GeV are carried out by means of a recent version of the Li\`ege Intranuclear Cascade Model, INCL++, coupled with two different evaporation-fission codes, GEMINI++ and ABLA07. In order to reproduce experimental fission cross sections, model parameters are usually adjusted on available (p,f) cross sections and used to predict (n,f) cross sections for the same isotopes.Comment: 36 pages, 18 figures, to appear in Nuclear Physics